Correlations

Economics: Explore & Apply, Enhanced Edition ©2005

Ronald Ayers and Robert Collinge

Microeconomics

Correlated to: AP* Microeconomics Preliminary Course Outline 2004–2005

I. Basic Economic Concepts

A. Scarcity, choice, and opportunity cost	Scarcity and choice, 2–3, 32–33; opportunity cost, 32. Opportunity cost appears several times throughout the book.
B. Production possibilities curve	33–41, 46–49
C. Comparative advantage, specialization, and trade	43–46 comparative advantage and exchange rates, 427–428 policy toward trade, Chapter 18
D. Economic systems	5–10, 14–16
E. Property rights and the role of incentives	Property rights, 5 (in context of free markets discussion); table 1–2 on page 10; Macro volume p. 314–316 (in context of growth); and Macro volume p. 440–442 (in context of developing countries) Incentives, 4 (3rd paragraph)
F. Marginal analysis	2–3 Marginal benefit and consumer surplus, 88–90 Marginal cost and producer surplus, 90–92 Spending at the margin, 147 Making production decisions at the margin, 197

II. The Nature and Functions of Product Markets

A. Supply and demand	Chapter 3
1. Market equilibrium	67–76
2. Determinants of supply and demand	58–67
3. Price and quantity controls	97–104
4. Elasticity	Chapter 5
—a. Price, income, and cross price elasticities of demand	Elasticity of demand of demand, 116 Income and cross elasticities, 127–128
—b. Price elasticity of supply	Elasticity of supply, 128–129
5. Consumer surplus, producer surplus, and market efficiency	Consumer surplus, 88–90 Producer surplus, 90–92 Efficiency, 37, 92–96
6. Tax incidence and deadweight loss	Tax incidence, 286 macro volume Tax shifting, 129–131 micro volume Deadweight loss, 93 micro volume
B. Theory of consumer choice	Chapter 6 and Chapter 6 appendix
1. Total utility and marginal utility	143–146
2. Utility maximization: equalizing marginal utility per dollar	146–154
3. Individual and market demand curves	67–69
4. Income and substitution effects	142
C. Production and costs	Chapter 7 and Chapter 8
1. Production functions: short and long run	178–181
2. Marginal product and diminishing returns	Marginal product, 178 Marginal product of labor, 299–300 Diminishing returns, 179
3. Short-run costs	190–204
4. Long-run costs and economies of scale	204–206
5. Cost minimizing input combinations	195–196 (production and cost), 309–310 (profit-maximizing employment of capital)
D. Firm Behavior and Market Structure
1. Profit	Chapter 7
—a. Accounting versus economic profit	175–176
—b. Normal profit	175–176
—c. Profit maximization: MR=MC rule	199
2. Perfect competition	Chapter 9
—a. Profit maximization	199 (Chapter 8)
—b. Short-run supply and shutdown decision	203 (Chapter 8)
—c. Firm and market behaviors in short-run and long-run equilibria	short-run behavior, 221–222 (Chapter 9) long-run behavior, 222–228 (Chapter 9)
—d. Efficiency and perfect competition
3. Monopoly	Chapter 10; Introduced in Chapter 9, p. 218
—a. Sources of market power	238–241
—b. Profit maximization	241–249
—c. Inefficiency of monopoly	248
—d. Price discrimination	247–249 Monopoly and labor, 307 Bilateral monopoly, 308
4. Oligopoly	Chapter 11, 269–280
—a. Interdependence, collusion, and cartels	Mutual interdependence, 270 Cartel and collusion, 274
—b. Game theory and strategic behavior	Game theory, 276–279
5. Monopolistic competition	Chapter 11, 280–285
—a. Product differentiation and role of advertising	283
—b. Profit maximization	280 (bottom paragraph)–281
—c. Short-run and long-run equilibrium	281
—d. Excess capacity and inefficiency	280–281

III. Factor Markets

	Chapter 12 and Chapter 13
A. Derived factor demand	296–297
B. Marginal revenue product	300–302
C. Labor market and firms hiring of labor	296–308
D. Market distribution of income	Chapter 13

IV. Market Failure and the Role of Government

	Chapter 14
A. Externalities	Chapter 14, page 345; Chapter 15
1. Marginal social benefit and marginal social cost	368
2. Positive externalities	368 (3rd paragraph)
3. Negative externalities	368 (3rd paragraph)
4. Remedies	374–383
B. Public goods	Chapter 14
1. Public versus private goods	344
2. Provision of public goods	348–353
C. Public policy to promote competition	Chapter 10
1. Antitrust policy	250–256
2. Regulation	257–262
D. Income distribution	Chapter 13
1. Equity	324–328
2. Sources of income inequality	328–332 Macro volume Chapter 17, Developing Economies and Poverty